Turbulence hits domestic air services again
Turbulence hits domestic air services again
5 February, 2011 - The governments effort to launch domestic air services by April, is once again experiencing turbulence. In what looks like a replay of the first domestic air services tender, the government is once again engaged in dialogue with the winning companies, Kuensel has learned.
Tashi Air, one of the two companies awarded the domestic air services contract, has approached the government raising concerns on the inclusion of national airline, Drukair, in domestic operations.The government selected both Tashi Air and Drukair to operate domestic air operations in December. This move surprised observers, as the tender document or RFP (request for proposals), did not mention such an outcome.But while such an outcome was not mentioned in the RFP, Tashi Air had proposed to operate international air services to subsidize its domestic operations. The other option offered was to operate only domestic operations but with government incentives such as a five year monopoly, a 10 year tax holiday, and various other fee waivers. Such incentives were not included if the proposer chose to operate international air services.Communications minister Lyonpo Nandalal Rai confirmed that Tashi Air has approached the government on concerns that two companies, instead of only one, will be operating domestic air services. They came on the lines of survivability of two service providers in a very limited and untested market, said the minister.Tashi representatives did not comment on the issue but pointed out that revolved around the entry of the second player.According to a December cabinet press release, Drukair had actually won the bid but as the national airline would have held a monopoly in both the international and domestic sectors, possibly leading to deterioration of service quality, Tashi Air had also been included .But the press release also pointed out that Drukair, as per its incorporation act, did not have to be involved in the bidding p! rocess. The press release said that Drukair can at anytime operate domestic air services. This meant that Tashi Air would have won the air contract if Drukair had not been involved.On whether Drukair would be operating domestic air services alongside Tashi Air, Lyonpo Nandalal said that despite its incorporation act, it still needed to apply to the government to operate domestic air services. He said that although the incorporation act gives Drukair the ability to expand into other sectors, such as domestic operations, it still needed to apply to the department of civil aviation (DCA), meet certain requirements, before being approved to operate domestic air services.Drukair CEO, Tandin Jamso, told Kuensel that Drukair has already applied to DCA to operate domestic air services. He said that as far as the national airline is concerned, permission to operate domestic air services has been given by the government and that work is already underway to obtain an aircraft. But he also added, unless, otherwise there is another directive.The communications minister said that if Drukair met all criteria, it would be approved. But he also revealed that this approval would depend on a government decision based on the market situation. With traffic on the domestic sector anticipated to be low, Kuensel asked the minister if only one operator would be allowed. He did not provide a definite answer.But the minister pointed out that the governments priority is ensuring the domestic air services sector is established and maintained. That means whoever provides that, they should be taken care, he said.On whether Tashi Air may be given certain flexibility in its operations, the minister repeatedly emphasised that the RFP would be adhered to. This means Tashi Air will not be able to neglect domestic operations if Drukair also flies domestically.The government will be meeting both Drukair and Tashi Air representatives next week to work out an arrangement. The governments effort to find a domestic air operator began in January last yea! r. But m id-way through the government was forced to revise and re-tender the contract after negotiations stalled with the selected company. The search for an operator finally ended in December last year when the government picked the two companies. Domestic air services are scheduled to commence this April. By Gyalsten K Dorji
5 February, 2011 - The governments effort to launch domestic air services by April, is once again experiencing turbulence. In what looks like a replay of the first domestic air services tender, the government is once again engaged in dialogue with the winning companies, Kuensel has learned.
Tashi Air, one of the two companies awarded the domestic air services contract, has approached the government raising concerns on the inclusion of national airline, Drukair, in domestic operations.The government selected both Tashi Air and Drukair to operate domestic air operations in December. This move surprised observers, as the tender document or RFP (request for proposals), did not mention such an outcome.But while such an outcome was not mentioned in the RFP, Tashi Air had proposed to operate international air services to subsidize its domestic operations. The other option offered was to operate only domestic operations but with government incentives such as a five year monopoly, a 10 year tax holiday, and various other fee waivers. Such incentives were not included if the proposer chose to operate international air services.Communications minister Lyonpo Nandalal Rai confirmed that Tashi Air has approached the government on concerns that two companies, instead of only one, will be operating domestic air services. They came on the lines of survivability of two service providers in a very limited and untested market, said the minister.Tashi representatives did not comment on the issue but pointed out that revolved around the entry of the second player.According to a December cabinet press release, Drukair had actually won the bid but as the national airline would have held a monopoly in both the international and domestic sectors, possibly leading to deterioration of service quality, Tashi Air had also been included .But the press release also pointed out that Drukair, as per its incorporation act, did not have to be involved in the bidding p! rocess. The press release said that Drukair can at anytime operate domestic air services. This meant that Tashi Air would have won the air contract if Drukair had not been involved.On whether Drukair would be operating domestic air services alongside Tashi Air, Lyonpo Nandalal said that despite its incorporation act, it still needed to apply to the government to operate domestic air services. He said that although the incorporation act gives Drukair the ability to expand into other sectors, such as domestic operations, it still needed to apply to the department of civil aviation (DCA), meet certain requirements, before being approved to operate domestic air services.Drukair CEO, Tandin Jamso, told Kuensel that Drukair has already applied to DCA to operate domestic air services. He said that as far as the national airline is concerned, permission to operate domestic air services has been given by the government and that work is already underway to obtain an aircraft. But he also added, unless, otherwise there is another directive.The communications minister said that if Drukair met all criteria, it would be approved. But he also revealed that this approval would depend on a government decision based on the market situation. With traffic on the domestic sector anticipated to be low, Kuensel asked the minister if only one operator would be allowed. He did not provide a definite answer.But the minister pointed out that the governments priority is ensuring the domestic air services sector is established and maintained. That means whoever provides that, they should be taken care, he said.On whether Tashi Air may be given certain flexibility in its operations, the minister repeatedly emphasised that the RFP would be adhered to. This means Tashi Air will not be able to neglect domestic operations if Drukair also flies domestically.The government will be meeting both Drukair and Tashi Air representatives next week to work out an arrangement. The governments effort to find a domestic air operator began in January last yea! r. But m id-way through the government was forced to revise and re-tender the contract after negotiations stalled with the selected company. The search for an operator finally ended in December last year when the government picked the two companies. Domestic air services are scheduled to commence this April. By Gyalsten K Dorji
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